What is "co-insurance" in health insurance?

Co-insurance in health insurance refers to a specific cost-sharing arrangement between the insured and the insurer, where after a deductible has been met, the insured is responsible for paying a predetermined percentage of the medical costs. This means if a policy has a co-insurance clause, the insurer will cover a significant portion of medical expenses, while the policyholder will pay a percentage of each claim. For example, in a plan with 80/20 co-insurance, the insurance company covers 80% of the medical costs, and the insured is responsible for the remaining 20%.

This mechanism helps to reduce overutilization of healthcare services by making policyholders somewhat financially responsible for their medical expenses, encouraging them to consider the costs of services they use. Therefore, understanding co-insurance is crucial for both insurance providers and consumers to gauge the potential out-of-pocket costs associated with healthcare services after the initial deductible has been fulfilled.